Here’s the latest sign that the gaming market is undergoing unprecedented change: game publishers are developing their own advertising businesses.
In fact, it won’t be long before the upfront-style events unleashed by those businesses, said Paul Mascalli, head of esports and gaming at PepsiCo. And he may have a point. More than most marketers, Mascalli has a front row seat as to why advertising dollars are becoming more and more attractive to game developers.
“In previous years, there was some apprehension about in-game advertising; As a gamer, if I go out and buy a $60 game, and then I get pre-roll, mid-roll, or intrusive advertising experiences, I probably won’t be very happy,” Mascalli told Digiday. Said during the Gaming Advertising Forum. 20 April. “So publishers have been really protective of it.”
However time changes. These days, publishers, like many other media owners, don’t want to rely on a single income stream. If they want to make games that are regularly enjoyed by millions, then on devices at low entry price points. And there are few better ways to offset the capital risk of growth and the rising cost of user acquisition than with advertising.
Yes, it may sound strange, but it’s not necessarily a surprise. One of the main reasons the gaming industry has evolved into a far bigger economic juggernaut than Hollywood and the music industry is its diverse business model and tiered price point. Advertising is another frequent revenue stream for game publishers—one that means they don’t have to rely on constantly telling gamers to spend a little more money on their brand.
Not that any of this is necessarily new. Over the years, game developers have dabbled in in-game advertising, but it was always the exception, not the rule. In part, because advertisers’ demands for game developers just weren’t that advertising was meaningful. Sure, marketers were in line to get their brands in the latest editions of FIFA and Madden, but interest in the area wasn’t as widespread as it is now – especially once it became clear that gamers were the opposite of being. were not, as previously thought, advertised while playing or watching the game.
“Creating a three-hour brand experience where people are hooked and fully engaged—it’s completely different from a 15-second TV ad,” said Stephanie, VP of Brand Marketing at Chipotle, during her talk at the Gaming Advertising Forum Perdue said. This paved the way for a nascent but rapidly growing investment in gaming that included immersive in-game experiences it continued, such as a massively popular Roblox experience, in addition to more targeted partnerships with streamers and influencers such as Carl Jacobs. .
Perdue said, “Once you think of it as a media channel, a way to create bespoke, unique content, I think you can go even further with unique brand experiences, which are in line with this point.” Depends on what the platform is.”
Moving forward is not straightforward. Games are unlike any other medium marketers advertise. Measurement is particularly difficult due to the placement of advertisements inside an ever-changing three-dimensional virtual environment, although the Interactive Advertising Bureau and the Media Rating Council are on the verge of releasing updated measurement standards. The market is increasingly fragmented, with internal in-game ads, more fleshed-out Metaverse experiences and impactful partnerships, representing just a few of the many different ways brands can reach the gaming community. And while gamers are more accepting of brand involvement than many marketers, there’s still a fine line between an in-game ad and an ad that impacts the gameplay experience.
“When you put it in a game like Forza, it’s the core of the experience and arguably adds to the realism,” said Jason Chung, assistant professor of game management and executive director of esports at the University of New Haven. , “Versus, am I playing Red Dead Redemption 2, and then Smith & Wesson going to put in a mid-roll commercial?”
Still, companies are emerging to help marketers connect the dots. Ad exchanges such as Frameplay, Bidstack and Anzoo have developed a significant inventory within the free-to-play game, making moves to educate brands about the opportunity and create new tools and metrics to measure their offerings. Is. Agencies are jumping into the game, bringing their gaming and exporting knowledge to help better connect game developers and their inventory with brands that fit their vibe. While the largest agencies are still learning to navigate the gaming advertising landscape, those able to strengthen these relationships through direct integration and curated marketplaces will have more control over the distribution of impressions, and thus more Will have an easier time providing incremental revenue. their customers.
As large game developers compete to establish themselves as media owners, small and medium-sized independent publishers may be most likely to suffer from this change in the landscape.
“Frankly, a lot of publishers that aren’t Microsoft and Sony won’t be happy with that, because you’re directly cutting into their revenue stream,” Chung said. “If I play a game of NBA 2K, I’m pretty sure [2K developer] Take-Two has given enough ads to make Madison Avenue blush, so good luck to them.”
Game developers may have no choice. Microsoft’s in-game advertising business has reportedly been in the works for years, but cultural and economic changes during the COVID-19 pandemic have turned gaming into a pillar of popular culture. As developers race to adapt to this change, gamers may be in for an explosion of in-game advertising before the hype subsides.
“If you add in too many layers, you’re going to end up like in the early days of TV, where entire programs were sponsored by a tobacco company or a laundry soap company,” Chung said. “People rebelled against it and said, ‘We don’t want to be exploited like this,’ which is why we moved to the advertising system that we have now.”